ASIC today made an exemption to the auditor’s independence declaration provisions in the Corporations Act 2001 (the Act) under Class Order [CO 05/910] Auditor’s independence declaration – exemption.
The auditor’s independence declaration is a declaration made by an auditor to its audit client disclosing any contraventions of the auditor independence requirements of the Act or of any applicable code of professional conduct. The declaration must be included in the directors’ report, which forms part of the annual financial reporting to members. This is a new requirement introduced as part of the CLERP 9 reform process.
The exemption will excuse an auditor from making a declaration if there are any contraventions under s324CE(2), s324CF(2) or s324CG(2) of the Act. This exemption will apply provided the auditor had reasonable grounds to believe that it had in place, at the time of the contravention, a quality control system that provided reasonable assurance that the auditor would comply with the auditor independence requirements.
An auditor will still be required to make a written statement to its audit client disclosing any contraventions of the other auditor independence requirements.
‘As this is the first year that auditors have been required to make this declaration, the way the new independence requirements work in practice will be tested for the first time’, Mr Malcolm Rodgers, Executive Director, Regulation said.
‘Some of the challenges around how the auditor independence provisions work in practice are now coming to light, and ASIC will work closely with Treasury to address those issues. The exemption we have made deals with an unintended operation of the auditor’s independence declaration provision’, Mr Rodgers said.
The class order commences on the date it is registered under the Legislative Instruments Act 2003.
End of release